Reasons to Outsource Manufacturing

More and more businesses are recognizing the benefits of outsourcing their manufacturing to China and some of the world’s largest companies are making the transition.

This trend has attracted top companies that are looking to take advantage; one of the world’s most popular and recognizable brands, Apple, sells mobile devices and electronics manufactured in China. According to a Forbes report, China’s outsourcing industry is growing at approximately 30% every year. Simply put, Chinese manufacturing has never been more popular due to the many incentives and benefits it provides.

It has never been a better time to outsource manufacturing efforts. Here are some of the primary ways that organizations can instantly benefit by outsourcing manufacturing to China:

Government Incentives with Chinese Manufacturing

By outsourcing manufacturing to China, companies will instantly benefit from more than 20 government-backed policies aimed at attracting foreign businesses, according to a study carried out by KPMG. Such policies include certain tax incentives, intellectual property protection, talent training, financial support, special working hours, and custom governance policies. These Chinese manufacturing incentives could help your company directly save and profit immediately.

Chinese Manufacturing Allows Easy Scalability

China’s enormous workforce makes it relatively easier to ramp up manufacturing. For example, some businesses can increase their shipping from a few thousand to a million products within a very short period of time (anywhere from a few days to weeks depending on product features, nature, materials, and complexity). This can help organizations hit the market before their competitors who manufacturing their products elsewhere, which translates to profits.

Workforce with Advanced Skills

China’s workforce consists of millions of people with advanced technical skills. In fact, China’s workforce was absorbing more than 1.5 million engineering majors as far back as 2006 according to the PRC National Bureau of Statistics. Currently, learning institutions in China add about seven million graduates to the workforce every year, according to KPMG. This means companies that outsource to China can expect quality services and products along with consistent communication.

Low Wages

Labor costs in China are competitive and lower than most alternative options. This means companies that outsource manufacturing to China enjoy much lower production costs.  Production costs in China are 30% lower compared to production costs in the US. This is despite rising wages in major manufacturing hubs like Shanghai.

Top-Notch Infrastructure

China has invested heavily in building roads, railways, high tech industrial parks, and even entire cities. This can all play a critical role in bringing production costs down. Poor roads or inefficient ports do not effect the Chinese coasts as much as a location with a less developed infrastructure.

Vibrant Domestic Economy

China’s large population and a booming economy make it a dream market for any manufacturer. Manufactured goods can be sold directly to domestic consumers including electronics, clothing, kitchenware, furniture, and books. Some businesses though, have the option to sell their products directly to China’s huge consumer market also.

It is clear that outsourcing manufacturing to China can translate to substantial savings. The cost benefits of outsourcing manufacturing to China arise from government-driven manufacturing incentives, ease of scaling up, sales to domestic market, low wages, and access to a workforce with increasingly advanced skills.

If your company would like more information on getting started or general questions about the benefits that Chinese manufacturing can provide, contact ITI Manufacturing today!

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